FSA confirms commission ban on GPPs

The FSA today confirmed it is banning commission on sales in the Group Personal Pensions (GPP) market from 1 January 2013.

The regulator says the rules will apply to all sales regardless of whether they are made through advice to individual employees, or through employer schemes.

This introduces the concept of ‘consultancy charging', where the costs of pensions advice and other services to employers must be agreed with the employer, but can be obtained from employees' GPP accounts, in a similar fashion to individuals' advice costs under adviser charging.

The final rules include:

• extend the ban on commission to GPP products and sales, irrespective of whether advice is given to individuals or the sales are made without advice, but by direct marketing information;
• allow commission to continue on existing GPPs set up before the ban on commission is implemented, including new members and increases in existing members' contributions;
• extend the ban on commission to prevent product providers paying commission on investment products linked to occupational pension schemes sold as alternatives to GPPs;
• allow ‘consultancy charging' from GPP contributions and/or members' accounts on a £-for-£ basis, as agreed between employers and their advisers;
• require full disclosure by advisers to employers of the potential adviser remuneration, including the likely total;
• and confirm that the ban on factoring proposed for individual investments - including personal pensions - should extend to adviser remuneration under GPPs.
  

More to follow...